Individual health plans

[Guest MarcieMcA]

I have an employer who has a group health plan but only some employees participate due to the high cost. The employees who do not participate in the group plan have individual plans (these individual plans cost less then the group plan). The employer takes payroll deductions for the employees with the indivdual plans and the employer pays the insurance companies the premiums (with the employee's contribution).

This employer is considering implementing a section 125. Can the premiums for both the group plan AND the individual plans be taken out pre-tax?

[papogi]

Yes. Individual policy premiums can be taken pre-tax for the employer to use to pay the issuer. What you can't do is take pre-tax deductions, let the employer pay for coverage on behalf of the employee, then reimburse, tax-free, the employee for those costs using those pre-taxed dollars. That would be double-dipping.

You're OK under 125, but HIPAA can cause some complications when it comes to individual policies through an employer.